Assessee can’t be Penalized for failure of Third Parties to submit PAN: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that no penalty can be levied on the assessee if delay in furnishing the TDS/ TCS statement was due to failure on the part of the third parties to submit PAN.

In the instant case, the assessee has deducted and deposited TDS/TCS but failed to file the requisite return within the stipulated period. Consequently, a penalty under Section 272A(2)(k) of the Income Tax Act, 1961 was imposed on the assessee.

Before the Appellate Authorities, the assessee pleaded that the Manager, Accounts of the Company was on leave due to serious illness, therefore, there was no compliance on the part of the assessee within the time. It was also submitted that the purchaser/licensee being small operator did not obtain PAN, therefore, particulars could not be filed in time.

According to the Tribunal, the above two reason were sufficient to conclude that there was a reasonable cause on the part of the assessee and this was only a technical or venial breach to the provisions.

“The requisite statement/returns have been filed belatedly, for which, penalty have been imposed. The assessee explained the reasons for this default because the concerned parties did not provide PAN and other details on time. Therefore, in the absence of the complete details, the requisite return/statement could not be filed on time,” the Tribunal said.

“The facts clearly show that assessee had a reasonable cause for failure to comply with the provisions of Law. On filing the belated returns/statements, Revenue has not suffered any loss because tax deducted was already deposited on time with the Revenue Department. It was, therefore, a technical or venial breach to the provisions contained in the Act for submitting return statement of tax deducted at source. The above reasons are sufficient to hold that the penalty need not be levied in the facts and circumstances of the case,” the Tribunal added.